Change is Afoot in Senate Reverse Payment Bill

At a September 10, 2009 Senate Judiciary Committee Executive Business Meeting, Senator Herb Kohl (D-WI) stated his plans to pursue a substitute amendment to S. 369, the Preserve Access to Affordable Generics Act, that would make significant changes to the proposed legislation. (A webcast of the Executive Business Meeting is available here. See minutes 46-49 for Sen. Kohl’s remarks.)

Under the version of S. 369 Sen. Kohl introduced in February 2009, it would be unlawful for a person, in connection with the sale of a drug product, to be a party to any agreement resolving or settling a patent infringement claim in which a generic applicant receives anything of value, and for a generic applicant to agree not to research, develop, manufacture, market, or sell the generic product for any period. Sen. Kohl’s substitute amendment would largely reverse course, permitting reverse payments between brand and generic companies if such companies can prove that the deals are “pro-competitive.” The Federal Trade Commission (“FTC”) would reportedly have to challenge the deals and the burden would be on the companies to prove in court that the agreements are pro-competitive; however, it is unclear what evidence would be needed to prove pro-competitiveness. In addition, we understand that Sen. Kohl’s substitute amendment would allow the FTC to levy fines of up to three times the revenue of the brand name drug in question if the agreement is found to be unlawful.

Although the Senate Judiciary Committee was originally scheduled to vote on Sen. Kohl’s substitute amendment at the September 10th Executive Business Meeting, we understand that some Committee members requested an additional week to study the amendment, and that Sen. Orrin Hatch (R-UT) has written a letter to Sen. Kohl expressing his concerns about the proposal. The Committee is scheduled to further consider – and likely vote on – the measure at its September 17th Executive Business Meeting.

If Sen. Kohl’s substitute amendment is passed, it will be at odds with the reverse payment provision added to the House Energy and Commerce Committee’s version of H.R. 3200, the America’s Affordable Health Choices Act, earlier this summer. As we previously reported, in late July, the Committee passed by voice vote an amendment to H.R. 3200 sponsored by Rep. Bobby Rush (D-IL) that would prohibit reverse payment settlements between generic and brand-name drug companies.